When Ed Zabitsky of ACI Research launched coverage of BlackBerry last July, the stock has just collapsed from over $14 to below $10. Zabitsky saw the cross-platform BBM story as highly attractive, despite understanding that the enterprise revenue model was going through a big transition.

Zabitsky has just published a brief note reiterating his strong buy recommendation and $20 target price. My understanding is he wasn’t making a short term prediction on the stock price, nor is he doing so now. That’s not how he operates. He thinks about product cycles and balances his research along with what the Street is actually expecting, and pricing into the stock.

How has his call worked out after 8 months? He’s up slightly but obviously still feels there is more to go. Initially he argued that BlackBerry would exit the hardware business. He figured it would happen in two stages, with the consumer exit happening first. This first state has pretty much happened now that Foxconn is taking over that end of things. It remains to be seen if the company inevitably exits the hardware market entirely. I’m not convinced it will happen, but if they don’t succeed in recapturing hardware sales in regulated markets I can see how this would take place, pushing BlackBerry into the realm of a pure software / services company.

In terms of what’s coming next, here are a few points taken directly from Zabitsky’s note along with my thoughts.

The upside potential for Blackberry shares is driven by BBM’s growth into a full-fledged competitor to Skype with full presence capabilities (IM, voice and video) with strong ties into the enterprise. BBM 2.0, released last week, takes their Android and iOS offerings beyond the messaging market and into VoIP and improved file and photo sharing. Combined with Blackberry’s unparalleled security of communications, this should make them more successful in advanced smartphone markets.

My take: I completely agree with this as a major opportunity. Zabitsky is actually the guy who got me thinking along these lines and is why I’ve been pushing so hard to have the company integrate more core functions such as instant text, push to talk, along with live (synchronous) voice and video. It’s a long road from vision to reality, but someone has to be the winner, and I’d love for it to be BlackBerry if at all possible.

The value of cross-platform BBM is underscored by Facebook’s $19 billion acquisition of messaging competitor WhatsApp. Facebook will have the arduous task of integrating their own offering with that of WhatsApp. Clearly this acquisition is meant by Facebook as a land grab in the consumer messaging space. While Blackberry’s software and services segments have always fit nicely into Microsoft’s enterprise offerings, it was not until Facebook’s $19 billion wake-up call that we considered acquisition by Microsoft to be a near-term possibility.

My take: This is an interesting angle. Skype just doesn’t seem to have that super fast and elegant flow to it on a mobile device. It was build for the PC, and adapted to mobile, unlike BBM which was always designed as a mobile client. I always thought I wanted Skype on my phone until I had it, at which point I never found myself using it. BBM, on the other hand, I dream of having it replace my need for phone calls, text messages, voice messages, and video. If Microsoft sees it this way, perhaps they’ll get serious about acquiring BlackBerry.

I agree! We're doing just fine. We don't want someone else ruffling our feathers. We just have to do some selling to precise markets to raise awareness of the great products coming out of Waterloo. I show people with BB10 devices the pinch to filter gesture in the hub and they're astonished! They didn't even know that existed. Why the hell do they not know about these things? Why waste time developing these great things if no one knows about it? Sell it. The BlackBerry website should be teaming with short how-to videos on each and every one of these new features.

CrackBerry has been doing an awesome job at showing those new features, but not every BlackBerry user reads CrackBerry. Perhaps they should!

It seems everyone loves the idea of a quick exit. Cause it may sound promising in the short term to make a quick buck. Whatever happened to just keeping your company intact and making money on different fronts continually for stock holders without selling. Lots of other companies are doing it, why can't they?

All though Windows phone is the only other phone i would see myself using in a very rare situation if BlackBerry suddenly disappeared from the world, MS buying BB would only sound interesting to me if MS adopted QNX/BB10 software instead of its own Metro UI to all phones...

Agree, just bought an office pro 8600 and had the pleasure to experience their incompetent service. These reps know jack about their products, my mom would do a better job. At least the printer does well so far.

I had a conversation with one of my vendors yesterday. The person with whom I spoke was waiting for an IM from someone else in the company. That is the first time I've heard of IM in an enterprise. I wanted to ask him what IM app they use but was unable to do so at the time.

I believe there's already enterprise support with a LYNC client on BlackBerry devices but can't communicate into BBM (or vice versa). LYNC is actually part of the unified communications (UC) offering by M$. Only issue is that a lot of organizations don't have the infrastructure (and funding) to support full-on UC. My organization from a UC standpoint can only roll out the chat function (or IM) and it doesn't really offer much value add. BlackBerry isn't too far off in terms of the UC space come to think of it. If they can do a desktop client that allows for either a standalone app with BBM and email or another option is to build a connector into M$ Outlook with all of BBM services. I think there are opportunities on the enterprise side to innovate a full end-to-end hardware & software solutions especially now that mobile computing power has ramped up over the past couple years. BlackBerry should turn some of their past conceptual enterprise videos into real proof of concept offerings. E.g. Start with a BlackBerry device NFC for office security pass and dock into a desktop terminal for a BlackBerry enterprise experience (work view on BlackBerry/QNX) and Docs2Go with a eBBM/Hub/Channels client that handles your corporate communications (and use BBM Voice/Video/Chat for meetings) and social media. Promo it as "A unified enterpise experience powered by BlackBerry."

After a sale of bbm, the share prices will tank! This is their biggest asset in my opinion. In order to surpass whatsapp they need to implement a desktop client. A web interface where you go to www.bbm.com, log in with your BlackBerry user ID, and bam your contact list is there along with all the current convos, every time a msg comes in it shows on both the web and device, your check the msg on one, it gets checked on the other, in other words they are in sync. Video would work via web cam, and mic. Next, make a bbm app available for smart tvs.

This is the future of secure communication, with anyone, anywhere, on any device, but we need it nowww if we are to take over whatsapp lol.

I'd rather not have my messages be sent to all my devices simultaneously but I would like to be able to access everything without missing a beat. For example, if I'm using my mobile all my communications should be view-able on that device only without worrying that someone may see my messages on a shared tablet / PC / etc... If I start using my tablet, it would be a simple as opening up BBM to get to where I left off on my mobile. If everything is stored in the cloud, why would one need to have all their communication sent to every device an individual may have at the same time? Seems like a security issue to me as a BBM user could be many people at once.

Bbm only can work on one device at the moment. With a web interface they can allow a desktop experience and have security implemented at the same time. They can do things like only allow one web session at a time, force log out so when you log in from a different device it sends a "force log out pin" to your cell phone, you then take the pin and type in the web browser and then this logs you out of wherever you were logged in last. It can also implement a icon in your cell phone bbm to show that there is a web session in progress and from your cell phone you can force end the web session. Also they can have a time out, so no activity on Web browser for X number of minutes or hours then automatic log out.

I think it can work if they do it rite. But I think it would be a pain if I was at work and for 8 hours I'm on my desktop session and then when I finish work I now have to scroll through the 8 hours of messages on my phone yo find out what I did on my computer. In my opinion the sync with my phone would be necessary, almost like how email works, when it's checked on another device it shows checked on my phone and vice versa.

My mistake. I thought you were talking about having ALL BBM enabled devices to be always signed on and synced simultaneously for a given user which in my opinion should just be synced through the cloud and just be picked up wherever a user last left off on whatever device the user is actively using. I would not mind how you envision the web interface component if it's done right either.

Chris....+100 on that comment on Skype.
I thought I really wanted it until I had it.
Now I hardly use it.
It's cumbersome, laggy and slow, of course when you compare it to BlackBerry msgr
I don't know why, but i have a feeling that the only way Microsoft and BlackBerry could actually put a dent in android and apple is to combine forces somehow.......i guess it's wishful thinking....

I said this two years ago to one of the areas larger Microsoft vendors. I never understood why Microsoft was so hard headed and thought that they could just build a new mobile platform from scratch and not either merge with or purchase BlackBerry.

It's actually a perfect merger that would help gain market share for both BlackBerry and Microsoft.

Think about it, Microsoft is in most corporate offices and the majority of homes. BlackBerry is still widely used (outside of the United states) in the corporate world. Merge these two technologies together and create a seamless integration if mobile / desktop / networked solution. Microsoft would have their severs and business servers with a secure mobile solution

Basically what I'm saying is that it's easier to buy a customer base then grow one organically.

If BBRY is sold to MSFT (or any other foreign entity), they'll have to spin off Certicom, and possibly QNX for the Feds to allow it. Both of these divisions are too important to national security to leave Canada.

I also agree about Skype, given time video will become available for Android, ios, windows and Nokia. I would really like to see a roaming setting for BBM data is crazy when leaving your providers network but texts arrive for free...

It would be cool if BBM could send out a coded SMS that BBM would pick up and understand making it readable in the BBM app.

Then at least you'll know when the message you are waiting for comes in and know if you should look for some wifi.

Now I know some people might say, " Why not just use SMS?" because the way described above would keep things secure and would require no more then flipping a switch in BBM when you hit the road.

Chris, with the announcement that BBM is coming to Windows phone, do you see a non-acquisition relationship there where BBM could supplant Skype on Microsoft products and become a highly integrated offering?

"It remains to be seen if the company inevitably exits the hardware market entirely."
Inevitable means impossible to prevent or must happen. Your use of inevitably in this context states that BlackBerry WILL exit the hardware market. Omitting the word from the sentence would more accurately portray your sentiments.

Not sure why Microsoft needs another phone manufacturer. They might benefit from the customer base, except they already have most of BlackBerrys customers on Windows. So it's hard to see why they'd buy.

And anyway, there's no reason BlackBerry couldn't get back consumer and enterprise market share.

The products are great. It's the price that's wrong.

Quite why this fairly elementary business factor escapes analysts I can't figure. The Foxconn deal is the single biggest marker for BlackBerrys future direction. The only reason to use Foxconn is to create lower cost devices.

There would be no reason to have a Foxconn deal to do only enterprise devices. (In fact just the opposite - Foxconn devices will be harder to secure).

The only sane reason for a Foxconn deal is to solve BlackBerrys major commercial stumbling block. That is the fact BlackBerry is uncompetitive.

You can see that from the T-Mobile fiasco. Evidently BlackBerry 7 devices don't generate revenue for T-Mobile, and given the fact T-Mobile more or less refused to sell BB10 devices, it seems BB10 devices aren't lucrative either.

In the end, carriers will not sell or market a device on which they make no money. When BlackBerry hit the US market with a low cost device, AT&T, Verizon etc will suddenly market BlackBerry as if they had just been discovered.

But there are other companies eager to acquire BBRY or some of its parts. If you look closer at the (in)actions of BBRY CEO'S (current CEO is definitely no exception) you will clearly see who benefited most from their "missteps". Let's see (only major players taken into account)..

I am really hoping that BlackBerry can live up to the potential of BBM. Cross-platform (including computer!), security, reliability and pure awesome. Channels is developing nicely too, even when I was initially quite sceptical.

Chris...where can we get a copy of the latest ACI research note you referenced? Also..i would love to see Microsoft take over BB. They have common ground in Enterprise and MSFT needs the additional Mobile strength. I think its a match made perfectly from a strategy point of view. maybe the new CEO will take the bold step of going this route.

If BlackBerry is so keen on enterprise and regulated markets, a purchase by Microsoft makes perfect sense. Fuse skype/ lync and BBM. Take mobile computing a la z30 on the go, and match with office etc. It's a killer.

Sorry, Chris. I continue to hear folks in the trading business speaking of selling or acquiring BlackBerry. BlackBerry is not for sale! We like what Fairfax & Chen are doing, and we see value in the company the way it is. Certainly, they need to beef up sales, but if they get the monkey off their backs, they can establish some confidence in the marketplace. Chen's comment on chances of success as 50-50 is disappointing. It creates too much uncertainty. It didn't need to be said.

MS's window of opportunity for purchasing BB came and disappeared about a year ago. Like it or not, MS is moving forward with it's mobile window strategy and hopes to integrate it with their existing desktop environment.

I will be honest in saying the MS chances of success are at best modest. Money keeps them in the game but they have very few workable assets. They have a mobile operating system which rises to the level of mediocre and Skype is fading from the scheme. Ford is obviously in the process of giving them the boot from the in car infotainment world. This is a big loss as it is the first tangible example, at least to the general public, of M2M application.

MS is frankly a lumbering giant that lacks the flexibility to adjust and move in the mobile environment. They seem very strong minded and somewhat oblivious to their weakness which suggests to me that it will be a couple of years before they ever consider dumping their mobile window strategy.

In contrast to MS, BB is on an upswing and it is pretty clear a resurgence is beginning. They are strengthening their enterprise offerings, BBM is starting to take off and QNX is making good inroads in the embedded markets. They are clearly dominant in industries requiring security. While there is a lot of work ahead, I guess what I'm saying is that when MS actually decides it might need a partner (or purchase a partner), there is a good chance that BB will be double or perhaps triple its current price. When you take that into account, plus a 25-50% premium for shares, a BB purchase would cost 30-40 billion. This is not chump change and would reflect a major shift in company formulation. Personally, I don't see this happening.

Chris great article as usual...love this side of the site.
Just curious, are you speculating on the Microsoft aspect, or have you heard something? It seems like it would be a lot for them to handle, integrating a massive company like BB...Nokia was just devices. BlackBerry is almost nefarious for its reach, if you think about QNX and the government contracts, etc. I'm sure it's not an issue of the money, but questioning whether such a move could be well handled, unless BB more or less operated autonomously as a division of Microsoft.

And as other commenters are saying...would BB10 be shut down and replaced by the Windows Phone OS? Or just no more BB devices? Strikes me as being more cumbersome and very complex than might be worth it.

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